businesshumanrights.org

On 21 September, 2022, an IT specialist with the Austrian Raiffeisen Bank, Timur Izmailov, was leading a normal life in Moscow. Three weeks later Izmailov found himself serving as a soldier in Russia’s 27th motorized rifle brigade near the Ukrainian city of Svatove, when he was eventually killed by mortar fire. How does a 33-year-old techie make his way from his cubicle to the frontline of an unprovoked war in a neighbouring democratic state?

Timur’s journey began on 24 February, 2022, when President Vladimir Putin ordered the all-out military invasion of Ukraine in continuation of a war started in 2014. The response was immediate. The Ukrainian people and their leadership — with the support of the democratic allies — have defended themselves against armed aggression despite gross human rights violations.

Western sanctions imposed on Russia created an extremely hostile commercial environment for companies such as Raiffeisen to continue their operations in the aggressor state. Many international firms pulled out, announcing plans to leave or suspend activity in Russia. But many more international companies continue to operate and pay taxes, thus contributing to the occupation of Ukraine and undermining the financial support provided to Ukraine by their own governments.

On 21 September 2022, President Vladimir Putin issued the mobilization decree that obliged companies to immediately assist in conscripting soldiers and help equip the Russian army. The results of this piece of legislation were immediately felt by many, including Timur Izmailov. Raiffeisen’s attempts to shield their staff from the draft failed.

How do bank employees in other countries feel knowing this is happening to their colleagues in Russia? How does a client of Raiffeisen based in Vienna feel, knowing the employees of his bank might soon become soldiers sent to the battlefield to kill innocent civilians in Ukraine?

An additional stopover on the companies’ journey from compliance to complicity happened last July, when Putin signed a new law allowing the government to impose special economic measures to support “counter-terrorism and other operations outside of Russia”. Once introduced, such measures would require companies to provide goods and services in support of these operations and impose significant penalties for failing to do so. In accordance with the law of 7 October 2022, the Russian subsidiary of Raiffeisen Bank International is now obliged to provide loan payment holidays to the troops fighting in Ukraine. Moreover, the bank is required to write off the entire debt in case of a soldier’s death. This legal requirement concerns other financial institutions that still operate in Russia, namely Intesa Sanpaolo, OTP Bank, ING Bank, Credit Agricole, Citibank, Credit Europe Bank and UniCredit.

This loan relief scheme has already triggered criticism from Ukraine’s central bank, as well as from investors concerned about reputational impact. The requirement for banks to grant payment holidays to soldiers “illustrates the dangers of operating in jurisdictions where companies can…be forced into actions that go directly against their corporate values,” said Eric Christian Pederson of Nordea Asset Management. “We feel that it is right for companies to withdraw from Russia, given its unprovoked attack on Ukraine,” he added.